Tests Are Better at Hiring Than You

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Jan 27, 2016
This article is part of a series called News & Trends.

When hiring managers and recruiters use their discretion to overrule the results of assessment tests, their hires do less well than workers selected exclusively on the basis of test scores.

After studying the tenure and performance of 300,000 hires at 15 different companies, a trio of researchers concluded that “firms can improve worker quality by limiting managerial discretion. This is because, when faced with similar applicant pools, managers who exercise more discretion (as measured by their likelihood of overruling job test recommendations) systematically end up with worse hires.”

Last year, when Matthew Jeffery and Andrea Woolley declared in an ERE post that, yes, an algorithm can replace a recruiter, they were describing how the SAP recruiting team democratized its university recruitment. Their provocatively headlined post focused on SAP inviting students everywhere to apply, then using assessment testing to cull without recruiter intervention.

That process created what Jeffrey and Woolley called a “meritocracy of application” from which hiring managers selected their hires.

Now, in a research paper published by the National Bureau of Economic Research, the evidence shows that at least for low-skilled work, assessment testing improves job tenure by 15 percent. Human intervention, the researchers found, was strongly correlated with poorer results.

When managers and recruiters chose candidates based on considerations other than their test results — interview performance or resume qualifications — their hires were more likely to quit or be fired.

Why is that? Bias or poor judgement, say researchers Mitchell Hoffman, of the University of Toronto’s school of management, Lisa B. Kahn, from Yale University’s School of Management, and Danielle Li, from the Harvard Business School. “Managers exercise discretion because they are biased or have poor judgement, not because they are better informed.”

To demonstrate that, the researchers examined the productivity of workers hired out of the pool of top scorers on tests against the productivity of workers who were hired despite their poorer scores. They found no difference in productivity among the different groups.

But when it came to longevity, those hired out of the top of three pools of workers assigned according to test results stayed on the job an average of 29 days longer than those at the bottom. “Better test scores predict longer tenures,” said the researchers, who noted that longer stays lowered costs for the client firms, which provide from a week to two months of paid training.

Managers’ poor hiring decisions, the researchers say, “generates increased turnover in a setting where workers already spend a substantial fraction of their tenure in paid training.”

The research only applies to hiring for such low skilled jobs as data entry, call centers, and standardized test grading.

This article is part of a series called News & Trends.
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